Interview at ABC Local Radio, Brisbane

SUBJECTS: Budget, Clive Palmer, Senate

TREASURER:

Good morning, Terri.

PRESENTER:

Now, Clive Palmer was expecting a nice dinner, good one, a bit of port and some dessert last night. The changes to the Budget were what he was really hoping for, did you at least give him a good hearing?

TREASURER:

Of course, and that has been the purpose of all of my discussions, to give everyone the opportunity to be heard but also, importantly, to hear what alternatives they’re offering. In some cases they are – and look, this is part of the usual discussions that would go on between the Government and some key independent people in the Senate.

PRESENTER:

You say you’re open to any offerings from the cross bench Senators on changes; what was offered by Clive Palmer last night?

TREASURER:

Now, Terri, I know what you’re going to do here. You’re going to ask me for every grain of discussion. I think it is hugely important that those discussions remain in a room and we continue the ongoing dialogue. You’re speaking to the wrong person if you’re after some details of what was discussed, or eaten for that matter.

PRESENTER:

OK, well we’re not really that interested in the menu.

TREASURER:

[laughter] Good.

PRESENTER:

But we do know that Clive Palmer has talked a lot about wanting the GP $7 co-payment gone. It is something the former Treasurer Peter Costello has agreed with. Is that set in stone?

TREASURER:

Well, I think given that Medicare is growing at over 7 per cent per annum, we need to ensure that it is sustainable and affordable, particularly with an aging population. We are asking Australians to contribute in order to build a stronger Medicare system. If we don’t build a stronger system, then over time, either the costs are going to become unsustainable or else the quality of care needs to be pared back. So, what we’re doing is exactly what Bob Hawke warned about back in the early 1990s. If you want to have a system that is sustainable you have to have a contribution along the way. That’s why we have a co-contribution on the Pharmaceutical Benefits Scheme introduced by Labor. That’s why in 1990 Labor thought it was a good idea and actually legislated it, but now they’ve chosen to oppose it simply for political reasons.

PRESENTER:

Well, people like Clive Palmer are saying it’s not fair in that pensioners – people who can least afford it, have to make I think is it…

TREASURER:

It’s $70 a year to have ten visits to the doctor, that’s what it is.

PRESENTER:

And that’s what he’s saying, even those people are being squeezed too hard on it. Would you consider exemptions rather than lowering the $7 co-payment?

TREASURER:

Well, again, we are prepared to discuss these things. You know, there is some irony in that pensioners pay over $360 for their pharmaceuticals each year, and when we ask for $70 to visit the doctor, if they have ten visits, then the suggestion is somehow, that’s unfair. It was Labor that initiated and supported $360 a year for pharmaceuticals for pensioners. So, you know, the people that are most understanding of what we’re trying to do are, in fact, the pensioners. Why? Because they know that the system needs to be sustainable for them and for others and therefore if you contribute something along the way the system remains sustainable.

PRESENTER:

So, when you’re saying you’re hearing support from pensioners, are they coming up to you and saying they don’t mind?

TREASURER:

I must confess, it is rare to have people come up and say, ‘I want to pay more for something’. I haven’t come across a lot of those people, mind you I have had a few people like that, but a lot of people understand that in order to maintain a system, to make it sustainable they will be asked to contribute. Now, we are keeping, for pensioners for example, the clean energy supplement even though we are getting rid of the Carbon Tax. So, in net terms out of the Budget, it is strongly arguable that pensioners are going to be better off, even with potential changes from male total average weekly earnings increases to CPI, inflation, the pension now is increasing at inflation because inflation increases are bigger than increases in wages. So, ultimately, we’ve got to make sure that our quality of life is sustainable. That’s what I’m desperate to do here, ensure that our quality of life is sustainable. If we don’t contribute along the way, then the pain for people in the future will be much greater.

PRESENTER:

I know, but as Clive Palmer and the other cross benchers have been keen to point out repeatedly to you following the release of the Budget, it has to be equitable, we all have to feel as if the vulnerable, the young, the unemployed, those on pensions aren’t getting slugged.

TREASURER:

Everyone is being ‘slugged’, to use your term.

PRESENTER:

More than their fair share.

TREASURER:

Well, everyone is being slugged and the fact is that someone on average weekly earnings is often paying all of their tax, so they work say a third of the year, to pay family benefits to someone on less than average weekly earnings. So, a cleaner in the middle of Brisbane is working full time, and every dollar of tax that they pay may well be going to pay for someone else to raise their children on family tax benefits. So, you’ve got to be fair here. I don’t think that a cursory look at the Budget is enough for people to understand what we’re really getting at. You have to look at the detail of what people actually receive now, and people are receiving tens of thousands of dollars in payments from other Australians. What we’re asking is for everyone to contribute, including higher income people. Now, I’ll give you one example: the change to fuel excise, the people that actually pay the most are higher income people, with an increase in fuel excise and yet, the Labor Party and the Greens are opposing it. They say you’ve got to have wealthier people or middle-income people pay more. Well, change to the fuel excise does exactly that; the poorest people either don’t have cars or actually don’t drive very far in many cases. But, they are opposing what is meant to be, according to the Treasury, a progressive tax.

PRESENTER:

On 612 ABC Brisbane Mornings, you’re listening to Joe Hockey, the Federal Treasurer. He was in Brisbane last night for a dinner meeting with Palmer United Party leader Clive Palmer. I know you said you won’t be pushed onto too much detail as to what was discussed, who gave way on what grounds, but I guess, the signal is, you’re meeting with the cross benchers still negotiating, in a way, to try and please everyone. The signal is you’re open to some change on some of these Budget measurers?

TREASURER:

Well, most of the Budget has already passed through the Parliament. This has been lost in some of the discussion. What we are now at is the point where we are building the structural changes in the Budget; such as the co-payment in Medicare, such as the higher education changes and some of the welfare changes. Those structural reforms ensure that we have a trajectory on debt that is $300 billion less than what it would be if we went about business as usual. These are the things that are going to help to change the debt trajectory or you end up doing what Campbell Newman and Tim Nicholls have had to do in Queensland and that is, take emergency action in order to address the problem you inherit. I am warning the people of Australia that if we do not take action now, we are going to end up paying $3 billion a month in interest alone. 70 per cent of that goes to people living overseas because they’re the people that the Federal Government is borrowing from.

PRESENTER:

But you need the support of people in the Senate, like Clive Palmer.

TREASURER:

Do you know, the best support you could get is from the Labor Party and they, only a few months ago when they were in government, believed it was important to do something about the deficit and debt. Now, the Labor Party is pretending it doesn’t exist. They created the problem, now they pretend it doesn’t exist. If Bill Shorten was a fair-dinkum Opposition Leader and someone who really did want to become Prime Minister he would be recognising firstly that he helped create the problem and secondly, he’d be helping us to fix it. But instead, the Labor Party is determined to oppose everything and when we were in opposition, we supported 80 per cent of their savings and then offered other savings in addition to it. So now, they’re opposing absolutely everything, they’re even opposing the savings they took to the last election. That’s the great irony of what’s happening at the moment; we’re trying to fix their mess and they’re trying to stop us.

PRESENTER:

How frustrating is it for you to try and have to sell this Budget so hard? Did you expect it to be this hard?

TREASURER:

Oh yes, of course.

PRESENTER:

There just seems to be road blocks everywhere for you.

TREASURER:

I don’t think there are roadblocks everywhere. I think there is a lot of overstated commentary on the Budget and obviously people are missing some self-deprecating humour along the way. It was always going to be a challenge, but Australians are up for the challenge, they know it’s real. There are some things they may not like, of course, we recognise that. There are some things we don’t like either. But the Budget is not about being likable, the Budget is about delivering what is right for the country and we have a steely determination to do what is right for Australia.

PRESENTER:

Will you be disappointed, though, if you do have to make some changes, some tinkering around the edges of some of these policies to get them through?

TREASURER:

Terri, we’ve put up what we believe to be the best policy. We’re not so precious as to say, ‘there is no alternative’. But we also want to ensure that we get to the end game, which is to stop the blood flow of debt and to ensure that Australians have the same, if not better, quality of life in the future that we have today.

PRESENTER:

Generally, what has been the reception with the cross benchers that you have been meeting? We know you’ve been criss-crossing the country.

TREASURER:

Yes, it’s not something I’ve been broadcasting, but it’s been happening.

PRESENTER:

You have, you’re off to Perth after this interview. Are you generally seeing them coming towards you on your arguments – the statements that you’re making around the Budget?

TREASURER:

I confess, I obviously haven’t met many of them previously. They’re very decent people, I think they have good intentions. I haven’t met anyone yet who doesn’t care about the country, doesn’t care about the community. I am heartened about their good intent. My job is to help them to understand the challenges that we face, to open the books, to show everyone the challenges we face, give them the opportunity to speak to the Treasury officials I speak to. Once they see that and once they get those briefings, they can see how important it is to support various measurers in the Budget. Now they might have variations on those measures, we’re prepared to deal with reality. I think everything has a principle and it is hugely important that you stick to your principles along the way.

PRESENTER:

You’re listening to Treasurer Joe Hockey on 612 ABC Brisbane Mornings. Moving on, away from the Budget discussion. Yesterday we heard about some of the big banks facing the country’s biggest class action aimed at recouping hundreds of millions of dollars in unfair late fees on credit card payments. There were also calls yesterday for a Royal Commission into, generally, bank behaviour and how they handle low-doc loans. I’ll just give you a little bit of detail on this, a consumer advocacy group says it is taking more calls every month from people on pensions, people on low incomes, facing house repossession here in Queensland. They’ve signed up to low-doc loans for investment, clearly not having the ability to repay those loans after buffering loans have run out. Here’s Denise Brailey, she’s from the Banking and Finance Consumer Support Association:

DENISE BRAILEY:

The realisation comes precisely when the buffer money stops. When the banks stop lending an extra $50,000 to pay the next couple of years’ payments. Also, the loans escalates. It can escalate from $400,000 investing, which they invest obviously, in a second property, probably a unit or something like that, but when they do that, they end up risking to lose both homes. They’ll lose their own home, that they started with. Now, this all happens over a period of only four years. So, they don’t really wake up for four to five years, but there are 30 year loans. So they believe the financial strategy and that’s what I’m dealing with at the moment. Very distressed people that are only on a pension and yet they’re being threatened by the big banks to take home that they actually, four years ago, owned outright.

PRESENTER:

Joe Hockey, are you aware of what this consumer advocacy group is saying is an increasing problem with low-doc loans and people who shouldn’t be signing on to them and yet the banks are pushing them on them?

TREASURER:

Well, the starting point is, you’ve got to be careful about taking on too much debt. As a consumer or a government. You have got to live within your means. That’s been around for thousands of years and it will continue. This is exactly why I warn about the challenges in the Budget. We have got to start to live within our means now. Interest rates are at record lows now so if people are in financial trouble now with interest rates at record lows, then it is going to get harder. Because interest rates have to go up. They’re at emergency lows as the previous Labor Party said. Interest rates will go up. So, I urge people only to borrow what you can afford to repay, don’t take a punt on what your income is going to be into the future. Now, if a bank lends money on the basis of prospective income, increases, then there are rules that the bank needs to comply with now, there are very strict rules provided by the prudential regulator, the Australian Prudential Regulation Authority (APRA) about the rules around how much the bank can lend and the circumstances in which they can lend. But, I am also wary of people getting into financial trouble when they borrow too much.

PRESENTER:

The argument here, I suppose, is that a lot of these people were told, they say they were told by the bank, they have the ability to repay these loans, then they were offered buffering loans when they couldn’t come up with the money. So they’re saying that they weren’t given enough information from the banks. So, it’s the bank’s behaviour that should be changed and should be looked at.

TREASURER:

There are a range of different ombudsman around that they can turn to as well who will investigate the matter and if there is misleading and deceptive conduct, the ACCC also has powers as well.

PRESENTER:

Joe Hockey, you’re about to get on a plane, are you sure you can’t squeeze in an hour or so at the Ekka? It’s on today, it’s the peoples day.

TREASURER:

Well that’s right, I looked around Brisbane this morning and said, ‘where is everyone?’ and they said it’s Ekka day. The Ekka has, obviously, a very rich history of farmers bringing their produce down for sale and I wish I could go. I’ve got my R.M. Williams on but that’s about as far as I can go.

PRESENTER:

And I’m guessing your advice in the show bag pavilion is ‘stick to your Budget’?

TREASURER:

That’s right, stick to your Budget, that’s a lesson for all of us Terri.